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Taiwan keeps policy rate steady, raises growth forecast


TAIWAN'S central bank left its policy rate unchanged on Thursday, as expected, and raised its 2020 growth forecast amid an improving export outlook despite a protracted US-China trade war.

The benchmark discount rate has remained at 1.375 per cent since June 2016, and the decision to leave it there was as expected by all 15 economists in a Reuters poll.

The bank said in a statement that due to manufacturers boosting production in Taiwan and rising demand for new technologies, it expected export growth to "recover mildly" next year, adding that increased government expenditure and domestic investment would also boost growth next year.

However, the bank's governor Yang Chin-long warned of clouds on the horizon.

"The downturn risk for global economies still remains," Mr Yang told reporters, citing geopolitical factors and the risk of a sharper economic slowdown in China.

Taiwan, whose manufacturers are a key part of the global supply chain for tech heavyweights such as Apple, has bucked a regional trend of growth downgrades partly thanks to factory relocations to Taiwan from China to avoid higher tariffs imposed during the US-China trade war.

But the bank said it remained uncertain whether orders shifted to Taiwan this year due to the trade war.

Mr Yang said the rate decision was unanimous and it would continue with its "appropriate accommodative" monetary policy to support the economy. REUTERS